Why Video-On-Demand Might Save Movies (and Movie Theaters)

My dad is old, and he kind of looks like W.C. Fields. He's old enough that there was a time in his life when people probably thought he actually was W.C. Fields. His favorite movie is Doctor Zhivago, and I'm pretty sure he hasn't enjoyed a movie since (he walked out of The Dark Knight in favor of Mamma Mia! And he walked out of Mamma Mia! in favor of a ham sandwich). He's not much of a movie-goer, but if you asked him which recent film is about "A swat team sent into a pitch black apartment building where a virus that turns people into demons is raging," he'd instantly be able to tell you that it's Rec 2, the plot of which he was intimately familiar with a month before its theatrical release. That's because my dad aimlessly watches a lot of television, and in his endless quest to find C-SPAN he rolls his eyes across the Magnolia Pictures "Early Screening" tab embedded in Time Warner Cable's VOD menus several dozen times a month.

In October of 2007 Magnolia inaugurated their "Ultra VOD" program by allowing cable subscribers to watch Brian De Palma's Redacted prior to its appearance in cinemas, and have since made approximately 75 films a year available to rent directly through VOD services. The vast majority of those titles have been made available day & date with their theatrical bows, but only a chosen few have received the "Ultra" service and been beamed exclusively into viewers living rooms for $10.99 a pop ($9.99 in standard definition). And my dad is a perfect example of why Magnolia would be interested in providing customers with early access to much-anticipated titles for less than the cost of a movie ticket.

If Magnolia wanted my dad to actually watchRec 2 they'd need to strap him into that chair from A Clockwork Orange, but in simply presenting the option to him, they've also alerted him to the movie's very existence. It's revenue-driven marketing, and as Magnolia / Magnet Senior Vice President Tom Quinn explains to Cinematical, "By the time you open theatrically you've built awareness across the 65 million houses promoting that VOD window - it essentially acts as a wide-scale TV ad campaign." An ad campaign that has the potential to make a significantly greater amount of money than it costs to launch or sustain. Rec 2 may have only grossed $27,766 when it finally hit theaters this summer, but not every Ultra VOD release is a completely insane sequel to a small Spanish-language horror film - not every Ultra VOD release will only play on seven screens. The program has had several noted successes in the past (according to a Variety report, James Gray's Two Lovers raked in "Well over seven figures" on VOD, a figure which bested Magnolia's profit from the film's eventual and impressive $3.2 million theatrical run), and beginning with this month's releases is poised to become a more pivotal platform than ever before.

There are two critical things in common between Monsters (a sci-fi film about giant, intergalactic cephalopods) and Freakonomics (a documentary about how ignored subsets of data can explain some of our world's most persistent mysteries). The first shared link is that they are the two biggest films receiving the Ultra VOD treatment this month. As to what the second thing is... well, that's a good question. What makes Monsters and Freakonomics ideally suited for that particular distribution model, whereas other recent and equally high-profile Magnolia releases like I Am Lovehave been deemed fit only for the traditional route? Quinn says that "[Magnolia's] big films with muscle are part of the Ultra VOD program," but how does that approach translate practically and what trends might be revealed by taking a closer look at what types of films tend to earn "muscle" distinction? The answers to these questions might form some of the most telling and prescient evidence we have as to what types of films will be acquired for mass distribution in the next few years. More importantly, could these be the films that save us from bad movies?

Monsters isn't a particularly good movie, but it might be a major one. Towering and not terribly imaginative Cthulu-esque octopi have colonized most of Mexico, an "Infected Zone" around which a jaded photographer is tasked with safely delivering his boss' plucky daughter back to her fiance in America. But a pilfering hooker interferes (as pilfering hookers tendt to do), and our disheveled leads are forced to cut through the heart of the quarantined area in order to get back home. It's the The African Queenmeets Cloverfield, a neat combo hindered by a sterile central relationship and uninteresting creatures, garnished with a few risible moments of socio-political commentary.

But Monsters is also impressive as hell, and a potentially critical film to understanding the Ultra VOD model. Written and directed by FX guru Gareth Edwards and supposedly shot for the microcosmic sum of $15,000, Monsters uses Adobe CS4 and the tunnel-vision of its frames to remarkably repurpose an ordinary travelogue of the Mexican countryside into something else entirely. It's the power of cinema at its most basic - armed with only his actors, a trusty boom operator, and camera equipment you could find at your local Best Buy, Edwards and his plucky cohorts force viewers to believe that Mexico is under constant threat of extraterrestrial devastation.

All of that is neat, but as far as its selection for Ultra VOD treatment is concerned, one of Monsters' most important assets is that it's called Monsters. It'll probably come as no surprise that the most successful films in VOD - Ultra or otherwise - are traditionally "genre" offerings that come across as something of a known quantity. As Matt Dentler of Cinetic Rights Management explains, "What will likely work are movies that people watch for escapism or movies that people watch to be shaken and stirred. Films that need the kind of critical response only a theatrical release provides, are probably less ideal for cable VOD. You really want films that can stand on their own two legs, because that's all most consumers will see when making a rental decision." Cinetic's VOD service FilmBuff is among the most utterly indispensable portals of VOD content, and though they might work towards different ends than Magnolia, the lessons gleaned from their approach and experience speak to the entire VOD community. Monsters is the perfect title for a VOD title, not only because it's eye-catching and bluntly expressive, but also because it's short. It fits on a cable menu that has a more limiting character limit than Twitter, a menu where Isabel Coixet's Map of the Sounds of Tokyobecomes Map / Sounds / Tokyo, a reduction that might seriously hinder the film's likelihood of grabbing casual cable subscribers.

When I asked Quinn as to what typifies the ideal candidate for Ultra VOD treatment, he was understandably reluctant to share exactly what qualities might identify films Magnolia would target in the future. He did confirm, however, that "There is a recognizable through-line, and it can be as minimal as a title." Such an admission points towards why Freakonomics - an established brand - was selected to be Ultra VOD's first documentary. It also explains why the likes of The Oxford Murdersand Survival of the Deadwere included in the program. As for Barry Munday... well, VOD isn't an exact science (although the film is about a ladies' man who gets his balls cut off).

But what ultimately makes Monsters such a crucial test of Magnolia's platform is that it's riding a wave of good buzz perhaps unprecedented for an Ultra VOD title. Hardcore cinephiles will flock to their cable boxes upon its September 24th VOD premiere like never before, and if many of them enjoy it (which I suspect they will), they'll surely spread the word to their less film-crazed friends in time for Monsters' October 29th theatrical debut. Quinn explained this predicament with the maxim, "If you're releasing a bad film, it's word-of-mouth you don't want to encourage." Most distributors need their films to be seen - Magnolia needs their Ultra VOD titles to be good.

When billionaire tycoon, Entourage thespian, and Magnolia co-owner Marc Cuban first launched Ultra VOD, he opined that, "Hopefully this will change the landscape of independent film allowing movies to gain awareness and momentum going into their theatrical release." And despite the fact that Two Lovers reaped a larger net profit from its VOD run than its theatrical engagements, building towards a strong and public showing in movie theaters will remain the primary goal of Ultra VOD unless or until the numbers swing dramatically towards the home experience. Quinn reinforced this perspective, and was quick to counter my concern that Ultra VOD customers would think Magnolia's films to be old news by the time they hit theaters. "You assume we'd be cannibalizing revenue but the reverse is happening - this is uncharted territory, but we've been meeting our projections." But for a program like this to really break out, build brand recognition, and become a distribution platform as widely understood as Hulu or iTunes, Two Lovers can't remain its best offering. It's a refined and relatively star-studded domestic drama that nicely illustrates how Magnolia isn't only interested in genre fare - but Hollywood is starting to pay close attention, and if Magnolia doesn't capitalize on their pole position and usher something hugely beloved into the pre-theatrical community, someone else might.

They're the only game in town for now, but it may not feel that way to some active VOD viewers. IFC's wonderful Festival Direct program has long been offering cable subscribers films that may never receive theatrical distribution, and now routinely makes even their most prominent films available day & date with their theatrical runs. Additionally, Time Warner Cable has until recently let loose major day & date IFC titles on Tuesdays along with the rest of the provider's VOD offerings, meaning that I was able to watch The Human Centipedefrom my bed 3 days before it hit even the IFC Center. 42West is the PR firm that handles IFC's various distributional tendrils, and when I spoke with partner and Entertainment Marketing Division co-head Cynthia Swartz, she rightly insisted that despite the early access TWC customers are sometimes granted, "The groundswell model is not applicable to IFC VOD." A 3-day advance window is trivial when compared to Magnolia's schedule (for one thing, Magnolia has time to adjust theater counts in accordance with VOD performance), but to me it felt like a (potentially inadvertent) toe in the water. Swartz imparted that IFC views VOD as "A significant additional revenue stream" rather than as a promo for a film's theatrical run. But with IFC so firmly entrenched in the VOD community, they're in a prime position to shake things up if and when they feel so inclined.

And such a move might be best for the film industry as a whole, because - as this Variety report details - day & date VOD is seriously hurting small market arthouse cinemas across the country. And at first blush it might seem as if Ultra VOD should have a similar effect, thus contradicting Tom Quinn's earnest affirmations that the program is feeding box office receipts. Ultra VOD titles may be faring well via cable (good news for filmmakers, who according to Filmmaker Magazine take home a significantly larger cut of the VOD revenue than they do theatrical), but they haven't yet experienced the kind of consistent box office success that would satisfy the program's mission statement. Neil Marshall's Centurion - one of Ultra VOD's highest-profile summer releases and a film Quinn referred to as "A huge property" - opened last weekend to a $3,569 per theater average, the 9th highest average of the frame (it's worth noting that between VOD, box office grosses, and the just-announced DVD / blu-ray, Centurion will probably resolve itself as a huge property after all).

All that being said, it may be VOD's weaknesses that affirm Magnolia's model, and provide a window of time in which Cuban and Quinn's ostensible objective for the service isn't just fulfilled, but massively so. VOD is growing at an average of 20% a year, and as cable companies strive to improve the experience, partaking in it might be second nature for viewers of all demographics. But for now, flimsy controls and unreliable VOD hosts make $10.99 seem like a steep price to pay to watch a movie on your tiny TV that's guaranteed to hit theaters soon, especially with the glut of programming available a few channels away for no additional charge. And even with Magnolia's generous 48-hour window, there's a lot of pressure to finish a film before it expires - if you throw a nasty Ambien habit into the mix, you might find that it suddenly costs $33 to see the end of Centurion (not that I speak from personal experience, or anything). Acceptance and legitimacy will come, but at the moment many casual viewers simply aren't comfortable enough with VOD to dive in. However, when folded into that sexy "Early Screening" tab and priced beyond any other VOD films, Ultra VOD films are instantly afforded a certain cache and credence as entertainments of value. Magnolia has eked the beginnings of a premiere brand from their precious cable real estate, and because of that their films feel removed and superior to other VOD offerings. Their films feel like a privilege, and when one of them finally hits theaters it's more akin to a homecoming than a release. The title sounds familiar. My dad can repeat the synopsis verbatim. And - if it's good - people who would never consider paying for VOD content will make a night of going to see it because people who do pay for VOD content have had a month to spread the word.

The more success Magnolia has with the approach, the more they'll be willing to invest in and fight for hotly contested properties and festival hits. The better they do, the better they'll get - the better they get, the better the movies that earn distribution will be, both via cable and in genuine movie theaters. And one day - when VOD has become unrecognizably accessible and comprehensive - the Ultra VOD machine will become large and strong enough to power all of Magnolia's releases and the balance between cable and theatrical distribution will be confused to the point where no one can tell if the tail is wagging the dog, or if there's even a dog at all. I don't know how you'll see movies if this future comes to pass, but there's a good chance that most of them will be worth seeing.